Technology | Media | Telecommunications

Friday, April 19, 2013

Over the Top Video Revenue to Exceed $20B by 2015

According to the latest market study by ABI Research, American companies like Netflix, Hulu, Apple and Amazon helped to drive the over-the-top (OTT) video entertainment market past $8 billion in 2012.

The three largest markets -- North America, Europe, and Asia-Pacific experienced year-over-year growth in excess of 50 percent in 2012.

The continued spread of connected consumer electronics (CE) and increasingly mobile devices -- such as media tablets -- are expected to push the market past $20 billion by 2015.

"The shift to digital and OTT distribution is accelerating, particularly as content providers increasingly warm up to these channels," Michael Inouye, senior analyst at ABI Research.

While traditional pay-TV services are still afforded many advantages, now it's the content owners who will decide if they continue down the same path or forge ahead -- disrupting the primary means of legacy media distribution.

The dynamics around revenue generation continue to change and currently vary by region. Asa an example, subscriptions are more significant in North America than they are in Europe or Asia-Pacific regions.

In time, however, ABI says that they expect a greater diffusion of revenue across the various business models. For instance, in 2012 58 percent of OTT video revenue came from subscription service, but ABI anticipates this share to fall to less than 32 percent by 2018.

In large part this movement is driven by a continual shift in consumer demand towards newer forms of digital content distribution. When people have a choice, they will drive change in the marketplace.

"While we still see great value and strength in the pay-TV sector we are also starting to see the pieces that will accelerate change fall into place," added practice director, Sam Rosen.

Whether it's Netflix expanding to international markets, or the ABC and CBS TV networks enhancing catch-up services, the building blocks that will restructure the how, when, and where consumers view content are starting to give shape to a new media landscape.

This future, however, isn't devoid of traditional media nor is it a matter of new channels necessarily winning, but rather a redistribution of wealth within the overall value chain.